The International Monetary Fund (IMF) has urged Bangladesh Bank (BB) to prepare a Residential Property Price Index (RPPI), which will help the country to understand the market and price scenarios and loan concentration of banks and non-bank financial institutions.
To prepare such an index, the global lender has given eight recommendations to the central bank in a report, titled “Report on Residential Property Price Index (RPPI) Mission (February 26–March 2, 2023” and published on August 7 on IMF’s website.
“The BB is strongly committed to developing a publicly available RPPI for Bangladesh. Reliable property price indexes and other indicators of real estate markets are essential for the assessment of developments and risks in property markets and understanding the linkages between property markets and financial soundness, as well as to IMF surveillance,” IMF said in its report.
According to BB sources, the RPPI preparation had started as a pilot project in 2016 but it did not see any progress later. In 2020, the process restarted to develop the index with data from eight banks and NBFIs but progress has been slow.
There is a shortage of manpower required in the central bank to launch this index, said the sources.
This will mainly be seen in the apartment prices of Dhaka and divisional cities. Besides, it will also show the trend of lending by banks and NBFIs in the property sector. As the inflation index gives a picture of the macroeconomy, RPPI will give a clear idea about the property prices, the sources added.
They also said that the work of preparing RPPI is going on in line with IMF’s advice. However, they do not know when the work will finish and when will it be published.
The IMF report said a mission was conducted from February 26 to March 2, 2023, to assist BB with the ongoing development of the RPPI.
The mission was conducted under the auspices of the Data for Decisions Trust Fund. A previous RPPI mission visited Bangladesh in December 2019.
Farhad/Awenim/
